What Martha’s Vineyard is worth for tax purposes

Almost without exception, since its founding in 1984, The Martha’s Vineyard Times has published an annual list of Vineyard real property values (VPV), and in recent years has made this data available online. For reasons sublime or pedestrian, the publication has always been a big hit. Not with everyone, mind you, but with most. Some readers consult VPV to find out what their neighbors’ houses and land have been assessed at, or the values of property owned by widely known seasonal residents. Some readers would rather the assessed values of their own houses were not listed, but they consult the list anyhow. But, however you approach this annual, comprehensive list, eagerly or bemusedly, and whether you are a year-round or seasonal property owner, you should know what Vineyard real estate is worth and how the towns compare.

The national increase in real estate values has not been uniform, and neither are the changes in value among the Island towns. Nationally, there are badly hurt regions, but there are also others where values have proven more durable and where prices are rising.

The six Vineyard towns have experienced virtually no increase in assessment values in the last few years. Using the most recent assessed values, those that were used to calculate tax bills for the 2015 fiscal year, taxable real estate in the six Island towns is worth $18.4 billion, up only six tenths of one percent over the values we reported last year. For fiscal 2010, total value was $19.03 billion, about 6.7 percent from the total value in the 2009 fiscal year in which the Great Recession began. So, after the initial shock, Vineyard real estate values have stabilized at diminished levels. This stabilization hints at better days to come, value-wise and an increase in the number of sales, year to date, is reason to think that the market may be improving. The volume of real estate sales for the first five months of 2014 increased over the same period last year from 115 to 198 but sales have not returned to the levels preceding the sharp decline that began in 2008, and the volume of properties for sale has stabilized.

Nevertheless, compared with real estate values elsewhere in the country, Island values held up during the housing bust and all but one of the six Vineyard towns have experienced modest increases in total value.

A look at average monthly median sales values for the first five months year over year finds that as of May, 2013, the median Island-wide value of closed sales was about $478,000. It rose in the same period in 2014 to $578,000. The average monthly selling price over the same period increased from $713,000 for the first five months of 2013 to $910,400 in 2014.

The assessed values we report in this edition of VPV, updated since the last edition was published a year ago, serve as the basis for property tax rates. The towns will use these values, updated by prices in actual sales, additions, remodels, new construction, and other factors to determine the tax base for the 2015 fiscal year, whose spending was determined at spring 2014 annual town meetings.

The combination of the swing in assessed values — modestly down and modestly up — during the downturn and the faltering recovery that the nation continues to experience, along with exceptionally low interest rates on municipal borrowing, plus determined efforts in most towns to rein in spending, has meant relatively stable tax rates over this difficult period. This is true, despite significant declines in state and federal revenue contributions.

Drastic changes in real estate values nationwide, and particularly in high flying parts of the country, don’t necessarily lead to corresponding calamity in small, desirable Martha’s Vineyard communities. For instance, Edgartown, worth $7.172 billion when we reported in last year, is worth $7.181 billion, roughly the same today. The county seat is the richest Island town. Oak Bluffs, $2.462 billion a year ago is slightly more at $2.522 billion. A total of about $281 million of Oak Bluffs real estate is tax exempt and not part of the tax rate calculation. That’s true for all of the tax-exempt properties in the six towns.

Chilmark, the richest of the up-Island towns and the second richest of all, is valued for the purpose of this report at $3.139 billion, slightly less than last year’s $3.144. West Tisbury, worth $2.353 billion last year, is now worth $2.354 billion. Tisbury’s real estate value, $2.432 billion when we last reported, is now $2.468 billion. Aquinnah real estate was assessed at $716 million last time, and is assessed at $732 million today.

Of course, not all the real estate in the six towns is taxable. Of the approximately $20 billion total value of property in the six Vineyard towns, roughly $1.9 billion, about 10 percent, is tax exempt, so that tax revenue lost to the six towns, based on the tax rates reported here, adds up to about $7 million. Edgartown has about 9 percent of its total value tax-exempt, West Tisbury, a whopping 20 percent, Oak Bluffs 10 percent, Tisbury seven percent, Aquinnah ten percent, and Chilmark about five percent. West Tisbury and Edgartown share ownership of the land occupied by the State Forest and the airport, which accounts for some of their large tax exempt totals.

How much a town’s real estate is worth is one measure of its borrowing ability, and that means whether new schools, emergency facilities buildings, or town halls may be financed. Vineyard towns, flush with real estate value, have built all of these municipal improvements in the last few years. Some of these projects have been undertaken in the teeth of the recession, and they have benefited from very low borrowing costs and typically favorable loan to value ratios, plus a historic caution about adding debt to town balance sheets.

Real estate values are also at the heart of home ownership, stimulating the Island’s largest industry. Typically, excluding the very depth of the recession, a little more than $500 million of Vineyard real estate changes hands in arm’s length transactions each year. Although that is a tiny fraction of total real estate value on the Island, about two percent, it is nevertheless a great deal of money, and it marks the starting point for a spiral of expenditures which contribute hugely to the Island economy. Architects, landscapers, and decorators, along with real estate brokers, lawyers, Island banks, builders, plumbers, carpenters, electricians, and excavators, all participate in the whirl of buying and selling that has real estate value at its core. The economic pressure on the real estate economy here has had some modest but measurably beneficial influence on the effort to create affordable housing here, lowering debt service, property values, and construction costs, but more powerfully the nation’s economic slowdown has diminished charitable giving for many important causes, including housing.

You should know that these values are more art than science. They are derived by examination of sales prices as they are revealed in house and property transactions recorded for your neighborhood at the Dukes County Registry of Deeds. As transaction values decline, so do assessed values. Market values affect neighborhood or like property assessed values for property that has not changed hands. These values, together with measurements of square footage of house and land, and quality of finish materials and workmanship, quality of views and waterfront are used to estimate value. Often, the location and nature of the land accounts for the largest part of total assessed value. Is it at the edge of the ocean, back from the edge but in view of the beach, in the woods, on a fashionable Edgartown street? All of these considerations affect the judgments of the assessors who visit each property before deciding on its value, and of course all of these characteristics are of significant influence.

But, because so little real estate changes hands each year, in 500 to 1,000 transactions, changes in assessed value, however carefully developed, rest upon a narrow base. And, if what smitten buyers pay for their dream houses or building sites — or, on the other hand, sharp pencil, bottom fishing buyers in this period of low values and increased inventory of property for sale — is at the root of the calculation, then it is indeed an artful calculation. That’s why the annual list, for taxpayers and voters, is an important data resource.